On the morning of November 10, 2002, Jon Thomas, market analyst for the Mexico leisure markets, canceled more than 300 seats “illegally” reserved on two flights to Acapulco. All of the seats on Jon’s Acapulco flights were booked by the same sales representative under a corporate name, Uniden Corporation. Jon could tell that the sales representative reserved space one passenger at a time using the relevant available fare; some seats were reserved at round-trip fares of more than $2,000 per person. By using a special corporate name field, the sales representative used a common gaming technique to suspend auto-cancellation and instant purchase payment programs that are required for all individual bookings by SABRE (semi-automated business research environment), American Airlines’ (AA’s) customer reservation system. Jon felt justified in canceling this space, because he previously had denied the group-space request and the sales representative subsequently violated established rules regarding the reservation of space for large groups. No more than 24 hours after Jon canceled the Uniden Corporation’s space, he received an irate phone call from Patty Dial, the Dallas–Fort Worth area regional sales manager. Uniden, a local Fort Worth–based company, needed more than 300 seats to Acapulco for its annual sales incentive trip. Jon faces the conflict of whether to accept or deny large groups each day, and he realizes that his market judgment is all part of managing yield for each flight. The Uniden group issue escalated to higher levels of management when Uniden, a major corporate customer for AA, found out that space promised by AA’s sales representative had been canceled. With the customer relations issue in mind, Jon entered a negotiation process with Patty to reallocate space. Normal group reservation procedure requires the sales representative to send an electronic message to the yield management analyst to request a block of space on a flight. The yield management analyst’s prerogative is to approve the request and block space for the group or to deny that request. The yield management analyst uses a variety of decision support systems based on historical market activity to make this decision. From the sales representatives’ perspectives, capturing this group is a clear victory, because it drives market share through increased sales volume for their regions. From the yield manager’s perspective, filling the plane with one group at the same fare on a peak-period flight is a wasted opportunity to use excess demand and the market’s limited capacity to maximize revenue per passenger. Unfortunately, sales representatives can fool SABRE into accepting group reservations without the yield manager’s approval. As in Jon’s case, a sales representative can book seats in blocks of fewer than 10 passengers, set up a corporate name field in the reservation that suspends all auto-cancellation programs, establish a sales contract, and negotiate a special off-tariff price for the group regardless of the fares listed in each reservation. Conflicting corporate objectives for sales representatives and yield managers is a major source of frustration for a yield management analyst. AA’s sales representatives establish monthly revenue and passenger goals to meet progressively higher market share objectives. Sales representatives maintain relationships with large corporate clients and travel agencies, and they implement volume- and revenue-based discount programs for large corporate accounts and travel agencies. AA’s yield management analyst attempts to maximize aircraft utilization (revenue per passenger and load factor at the same time) to improve overall market revenue. The yield management analyst has very little contact with the end customer and uses decision support systems to manipulate pricing and inventory allocation programs. The sales representative’s goal is stimulation of sales, while the yield management analyst’s goal is sales optimization. Jon and Patty’s conflict highlights a situation in which yield management and sales objectives come in direct conflict and the system breaks down. Yield management is an ideal operating strategy for companies that face temporary imbalances between capacity and demand, spoilage (i.e., a product that must be used immediately), and high fixed costs/low variable costs. Yield management enables companies to maximize use of constrained productive capacity with a discriminating eye on product yield. Each day, Jon faces the decision of whether to fill a plane early with lower fares or to save space for higher-revenue passengers. YIELD MANAGEMENT IN THE AIRLINE INDUSTRY Passenger demand often outpaces capacity during peak seasons, days, or other times, as in Jon’s Acapulco market. In essence, airlines face temporary imbalances between capacity and demand on a daily basis. In the situation that Jon faces, only Aeromexico, Mexicana, and AA have direct flights to Mexico from Dallas. During low-season periods, it is difficult to fill these planes, whereas in high season, there is more demand than the total market capacity can handle. Clearly, AA faces high fixed costs and low variable costs, because adding one more passenger to a flight costs very little compared with the fixed costs of providing and maintaining the scheduled aircraft service. Finally, once the airplane pulls away from the gate, all of the empty seats can never be sold, and this results in spoil- age. When faced with excess demand and limited capacity, the yield management analyst may “choose” what traffic is most desirable to optimize the total revenue on each flight. The different levels of yield management sophistication between airlines is the source of a competitive advantage in some highly competitive markets. From mid-November through the end of May, Jon’s Mexico leisure market enters its peak season and provides an excellent opportunity for textbook yield management strategies. During the time that this case covers, AA has a total of nine daily round-trip flights to Acapulco, Cancun, and Puerto Vallarta. Jon is in charge of setting all the fares connecting Mexico with the rest of the world as well as managing the inventory control. Each origin–destination market, such as Dallas–Cancun, has more than 30 fares to maintain. In general, all airlines use price discrimination and yield management to maximize revenue. By maintaining a tiered-fare structure, the yield management analyst can force passengers to pay higher prices in times of greater demand. Jon helps AA to maintain a tiered, market-based fare structure that leverages the price sensitivities and flexibility of its business and leisure customer segments. Fare rules and prices are differentiated based on the time and date of the flight, origin of the passenger, and historical demand patterns in that market. Table 11.11 outlines the different behavior of the two passenger segments. Table 11.11: Behavior of Airline Passenger Segments Leisure Passenger ____________ Business Passenger Price-sensitive …………………….……………..… Price-insensitive Advance booking …………….……………………. Last minute booking Flexible day and time …………………….......... Inflexible on day and time Long trips ……………….……........................... Short trips Discretionary travel …………….………........... Time-dependent travel Consults travel agents …………………………… Frequent flyer and knows destination Travels over weekends …………………………… Weekday travel only Seasonal travel …………………………………..… Less seasonal Little loyalty ………………………………………… Loyalty based on frequent flyer credit Facing spoilage, high fixed costs/low variable costs, and temporary demand imbalances, airlines use both demand and capacity management to maximize revenue. Airlines use three yield management tools to maximize revenue and sell the “right” fares to the “right” passengers: “overbooking, dis- count allocation, and traffic management.”13 To execute price discrimination with a tiered-fare structure, the airplane capacity is divided into different sections, regardless of where the passenger sits (unless the passenger is in business or first class). The yield management analyst spreads the available fares over the sections (i.e., discount allocation) and uses overbooking and traffic management strategies to maximize revenue. Taking passenger reservations beyond the true capacity of the airplane to ensure a full flight is referred to as overbooking. This strategy, based on seasonally adjusted historical data, accounts for expected no-shows, last-minute cancellations, and missed connections. Overbooking generates a tremendous amount of incremental revenue for the airline, and it provides airline travelers with greater choice. More flights and fares are made available to a greater number of passengers. In Jon’s Mexico leisure markets, levels of overbooking average approximately 25 percent more than capacity and can reach as high as 50 percent. The overbooking level typically starts off high 6 months before departure of a flight and slowly declines as bookings turn over, then restricts excess sales, and forces “selling up” during periods closer to departure. Discount allocation works together with traffic management to spread the tiered-fare structure over the different inventory sections of a plane. Discount allocation attempts to save seats for higher-valued, last-minute business customers who are willing to pay more than the discounted price. AA’s Boeing 737, which is the aircraft used in Jon’s Mexico markets, holds 100 passengers: 12 in first class and 88 in coach. On a typical flight, Jon may have two or three separate fares for first-class passengers and 25 different fares for coach passengers. AA’s traffic management or indexing system automatically spreads Jon’s fares over the plane’s inventory sections to provide more inventory for higher-paying and less inventory for lower-paying passengers when faced with excess demand. Traffic management or AA’s indexing system also values long-haul, higher- paying passengers more than short-haul passengers, and it provides increased inventory availability for the higher fares. Overbooking and discount allocation levels are set differently based on historical demand patterns for the particular flight’s departure time, day of week, days until departure, and season of departure. The levels change daily for each flight in AA’s expansive system based on fluctuating demand. Jon is responsible for overriding system decisions and implementing different and new discount allocation and traffic management strategies to improve the average revenue per passenger and the load factor of his market. Specifically, Jon decides what fares to file for each passenger group, what restrictions to apply to each fare, how many seats to save between higher- and lower-valued fares, increased availability for longer-haul and high-demand markets, and inventory restriction for lower- valued fares. SABRE opens flights for sale more than 300 days before departure. Maintaining yield in a volatile market, such as Jon’s Mexico leisure markets, adds increased uncertainty because of the large fluctuation and less predictable nature of the historical demand patterns. Jon’s Mexico leisure markets are especially unpredictable, because frequent yet dispersed group movements distort decision support system inventory projections, average demand, overbooking levels, and dis- counted seat allocation. Assignment Read the following instructions for the Yield Management Game. Your instructor will provide passenger data and a tally sheet for a class exercise on “game day.” Yield Management Game and Instructions The yield management game illustrates the trade-off between overbooking (selling more than capacity) and spoilage (having idle capacity), with the objective of maximizing revenue when faced with excess demand in the form of various revenues per passenger and different passenger volumes. This particular game focuses on airline capacity management, but is applicable to all fixed capacity services (e.g., hotels and cruise ships). When allocating seats to prospective passengers, the yield management analyst confronts a problem of maximizing total revenue for each flight. This includes capturing the ideal mix of discount and premium passengers at full capacity utilization without overselling too many customers. The objective of revenue maximization is simple (fill the airplane with the highest paying passengers), but uncertainty makes it a challenge. Specifically, historical booking trends in the airline industry indicate that the more flexible discount or leisure traveler makes reservations far in advance of departure, while the inflexible premium or business traveler waits until the last minute, often walking up to the plane at the time of departure. To capitalize on this passenger behavior, the airlines have exercised price discrimination to differentiate the passengers with advance purchase, time-of-day, and duration of stay requirements. While price discrimination helps the airline to manage its capacity constrained resource, it does not address how many seats to sell each customer segment—business or leisure passengers. To further complicate the yield management analyst’s task of maximizing total revenue, last minute cancellations, passengers missing connections (misconnect), and no-shows threaten to “spoil” (empty seats) seats and lose potential revenue. You will be using the strategies of discount allocation and overbooking to address this problem. Discount allocation is necessary because a plane can be filled long before departure with discount passengers—clearly not a revenue maximizing strategy. Therefore, the yield management analyst attempts to “save” seats for the last-minute premium demand by allocating only a certain amount of seats to early-booking leisure passengers. While overbooking helps overcome spoilage, it opens the possibility for over-sales. The yield management analyst attempts to weigh the cost of an over-sale against the cost of “spoiling” seats or losing potential revenue from an additional sale. The analyst prefers to oversell the flight up to the point where the over-sale cost equals the additional revenue of adding a passenger. In this game, you will act as the yield management analyst in charge of a pseudo-flight. Based on the historical booking pattern for your flight, leisure passenger demand, typically large groups, appears as far out as 100 days before departure up until 14 days before departure. Business passenger demand enters the market closer to departure at approximately nine days prior to departure up until the time of departure. Other historical market statistics for your plane show that the average misconnect, no-show, and cancellation rate for this peak season flight is 20 percent and the average revenue per passenger is $400. Both over-sales and spoilage cost the airline revenue: over- sales are a direct expense, while spoilage is lost potential revenue. The higher the number of over-sales, the more money gate agents must pay to get passengers off the plane. Your objective is to maximize total revenue generated on this flight. GAME FACTS Airplane Capacity: 100 seats Historical Market Information: Average no-show, misconnect, and cancellation rate: 20 percent Average revenue per passenger: $400 Spoilage penalty: $200 for each empty seat Over-sale penalty: 1–5 over-sales ………… $200 per passenger 6–10 ….………………… $500 10–15 ………………..… $800 16+………………….… $1,000 Game Phases The game will be played in three phases reflecting the different time periods prior to departure. Phase I is total passenger demand received outside of 13 days prior to departure. Phase II is total passenger demand between 13 days prior to departure and the day of departure. Historical market trends suggest that large groups and families make reservations during Phase I, while individuals and business passengers make reservations during Phase II. Phase III shows you the number of passengers who actually show up for the flight and their resulting revenue contribution. Objective: Maximize Total Revenue!
> 11. The single important attribute of a project manager is leadership ability. 12. Schedule variance is the difference between budgeted cost for work performed and actual cost of work performed. 13. The term calendar is used in project management to ke
> 1. The critical path for a project with uncertain activity times is not known for certain until after the project is completed. 2. A project can be defined as a set of complex interrelated tasks with different requirements regarding activity time and re
> 11. POS scanning is used to initiate a purchase order to a pre-approved vendor automatically when the stock levels are depleted (or reach a reorder point). 12. Information management has been the key in allowing services to meet customer demands without
> 21. World-class service operations strive to replace workers with enhanced automation. 22. Firms classified as "available for service" view quality improvement efforts with disdain. 23. For a firm achieving "journeyman" competitive status, the back-offic
> 1. Point-of-sale scanning became feasible only when industry agreed upon a universal system of bar coding. 2. One role of holding inventory is to hedge against anticipated increases in the cost of the inventoried items. 3. Inventory management is concern
> 11. Fast-food restaurants use a causal model to forecast daily demand for menu items. 12. Subjective models are used to assess the future impact of changing demographics. 13. Costs for preparing time-series forecasts generally are lower than for other mo
> 1. Because of the nontangible nature of a service, forecasting does not play as important a role in service operations as in manufacturing operations. 2. The trade-off to be made with respect to accuracy is between the costs of inaccurate forecasts and t
> 14. When Xerox Corporation introduced the Model 9200 Duplicating System, the level of service dipped because technical representatives were assigned to territories. 15. The average time a customer should expect to wait can be calculated using just the me
> 1. Capacity planning decisions deal implicitly with decisions on the cost of making consumers wait and the extent to which these costs can be borne. 2. A system is said to be in a transient state when the values of its governing parameters in this state
> 1. Waiting is often seen as psychological punishment because the consumer is aware of the opportunity cost of waiting time and the resulting loss of earnings. 2. The net result of waiting, apart from the boredom and frustration experienced by the consume
> 12. Yield management is a pricing and capacity allocation system that was developed by American Airlines. 13. Yield management is a strategy that manages both demand and capacity. 14. An example of segmenting demand is seen when movie theaters offer mati
> 1. The use of a ski-resort hotel for business conventions during the summer is an example of using the complementary service strategy. 2. Overbooking is a strategy that can be used to smooth demand. 3. The strategy of segmenting demand to reduce variatio
> 11. A diversified network is a situation where many services are offered at a single location. 12. Franchising usually is used when developing a focused network. 13. A family restaurant is an example of a focused service. 14. Communication is included in
> 1. Network development is a consideration in the decision to plan a multinational service. 2. When a firm offers multiple services at a single location, it is using a clustered service strategy. 3. A franchise is a low risk investment, because the franch
> 14. Retail and wholesale trade had the greatest percentage of U.S. employment by industry in 2014. 15. From a marketing perspective, services, unlike goods, involve transfer of ownership. 16. It is convenient and often necessary to combine the operations
> 14. Customer-supplier duality acknowledges the customer inputs in a service relationship. 15. A bank is an example of a service provider with a single-level bi-directional service supply relationship. 16. Transfer enhances productive capacity by enabling
> 1. In the physical goods supply chain, information moves to the left and material to the right. 2. Customer demand variability is the most difficult factor to determine in a goods supply chain. 3. In the past, the flow of goods in a physical supply chain
> 11. Geographic information systems are a visual method of displaying data. 12. Cross-median is an approach to the location of a single facility using the metropolitan metric to maximize the total distance traveled. 13. Marketing intermediaries are busin
> 1. Finding a unique set of sites in a multi-location problem is a simple extension of the methods used for single facility location. 2. When a customer travels to the service facility, the direct cost that is incurred is the decrease in potential custome
> 1. DEA circumvents the need to develop standard costs for each service when comparing the efficiency of multiple service units that provide similar services. 2. Data envelopment analysis (DEA) is best used in an environment of low divergence and high com
> 11. Serving complimentary drinks on a delayed flight is an example of empathy being shown by the service personnel to the irate customer. 12. In the service quality gap model, GAP1 arises because of the management’s lack of understanding about how custom
> 1. The concept of quality service deployment is based on the belief that services should be designed to reflect customer requirements. 2. Being meaningful and easy to invoke are important elements of a good unconditional service guarantee. 3. A process i
> 14. The procedure to improve flow distance in a process layout by arranging the relative location of departments is known as operations sequence analysis. 15. A product layout affords some degree of customization. 16. Mid-Columbia Medical Center has a sp
> 1. The servicescape can influence perceived quality. 2. The design of facilities is dependent entirely on the construction and operating costs of the facilities. 3. A well-conceived servicescape can communicate desired customer behavior. 4. Heuristic alg
> 14. Internet banking is a service that would appeal to the economizing customer, the personalizing customer, and the convenience customer. 15. Efficiency- versus-satisfaction is the possible source of conflict in the relationship between the customer and
> 1. Services are deeds, processes, and performances. 2. The Clark-Fisher hypothesis notes the shift of employment from one sector of the economy to another. 3. The fall in employment in the agricultural sector is the primary reason for the increase in se
> 1. Who are Goodwill’s customers and how have their demo-graphics changed over time? 2. How should the introduction of for-profit thrifts affect Goodwill’s decisions about the role of customer service? 3. How can Goodwi
> 1. Marketing analysts use market position maps to display visually the customers’ perceptions of a firm in relation to its competitors regarding two attributes. Prepare a market position map for Alamo Draft house using “food quality” and “movie selection
> 1. For the Burger Palace example, perform a complete analysis of efficiency improvement alternatives for unit S2, including determination of a composite reference unit. 2. For the Burger Palace example, perform a complete analysis of efficiency improveme
> 1. Compare and contrast the strategic service vision of El Banco and United Commercial Bank. 2. Identify the service winners, qualifiers, and service losers for El Banco and United Commercial Bank. 3. What are the differentiating features of banks tha
> 1. Use DEA to identify efficient and inefficient terminal operations. Formulate the problem as a linear programming model, and solve using computer software such as Excel Solver that permits input file editing between runs. 2. Using the appropriate refer
> 1. Assume that you are part of the management staff whose task is to develop this sketch plan. Using Microsoft Project, develop the PERT network as outlined above, identify the critical path, and determine the expected time to reach basic operational sta
> 1. Using Microsoft Project, prepare a network and identify the critical path activities, the expected project duration, and scheduling times for all activities. 2. The elapsed time for delivery of the hardware is estimated at 90 days. Would the project c
> Located in a major southwestern U.S. city, Elysian Cycles (EC) is a wholesale distributor of bicycles and bicycle parts. Its primary retail outlets are located in eight cities within a 400-mile radius of the distribution center. These retail outlets gene
> 1. Assuming that the cost of stock out is the lost contribution of one dessert, how many portions of Sweet Revenge should the chef prepare each weekday? 2. Based on Martin Quinn’s estimate of other stock out costs, how many servings sho
> A.D. Small, Inc., provides management consulting services from its offices located in more than 300 cities in the United States and abroad. The company recruits its staff from top graduates of recognized MBA programs. Upon joining A.D. Small, a recruit a
> Gnomial Functions, Inc. (GFI), is a medium-sized consulting firm in San Francisco that specializes in developing various forecasts of product demand, sales, consumption, or other information for its clients. To a lesser degree, it also has developed ongo
> Oak Hollow Medical Evaluation Center is a nonprofit agency offering multidisciplinary diagnostic services to study children with disabilities or developmental delays. The center can test each patient for physical, psychological, or social problems. Fees
> Computer simulation provides management an experimental laboratory in which to study a model of a real system and to determine how the system might respond to changes in policies, resource levels, or customer demand. A system, for our purposes, is define
> 1. Describe Xpresso Lube’s service package. 2. How are the distinctive characteristics of a service operation illustrated by Xpresso Lube? 3. What elements of Xpresso Lube’s location contribute to its success? 4. Given the example of Xpresso Lube, what o
> On a hillside in Rolling wood, a community just southwest of Austin, Texas, the Renaissance Clinic provides dedicated obstetric and gynecological services. The medical treatment at this facility is wrapped in an exclusive-feeling physical environment tha
> Let us revisit the Automobile Driver’s License Office Example 5.2 and model the proposed process improvement shown as Figure 5.6 (b). Recall that the improvement consisted of combining activities 1 and 4 (Review Application and Eye Test
> Renaissance Clinic is a hospital dedicated to the health care of women. It is located in the hill country surrounding Austin, Texas, and offers an environment that is unique in the city. At the time of a visit, a patient of Dr. Margaret Thompsonâ&#
> 1. During periods of bad weather, as compared with periods of clear weather, how many additional gallons of fuel on aver-age should FreeEx expect its planes to consume because of airport congestion? 2. Given FreeEx’s policy of ensuring that its planes do
> The Houston Port Authority has engaged you as a consultant to advise it on possible changes in the handling of wheat exports. At present, a crew of dockworkers using conventional belt conveyors unloads hopper cars containing wheat into cargo ships bound
> Go forth armed with clipboard and stopwatch and study an actual waiting experience (e.g., post office, fast-food restaurant, retail bank). Begin with a sketch of the layout noting the queue configuration. Describe the characteristics of the calling popul
> 1. In this chapter, we referred to Maister’s First and Second Laws of Service. How do they relate to this case? 2. What features of a good waiting process are evident in Dr. X’s practice? List the shortcomings that you see. 3. Do you think that Mrs. F is
> Thrifty Car Rental (now part of Hertz) began as a regional business in the southwest, but it now has more than 470 locations across the country and almost 600 international locations. About 80 percent of its U.S. locations are at airports, and the rest a
> 1. For the forecast period (i.e., July–December), determine the number of new trainees who must be hired at the beginning of each month so that total personnel costs for the flight-attendant staff and training program are minimized. For
> 1. How is SSM different from Deming’s PDCA cycle? 2. Prepare a cause-and-effect or fishbone diagram for a problem such as “Why customers have long waits for coffee.” Your fishbone diagram should be s
> 1. Assume that you are the assistant to the manager for operations at the FAA. Use the techniques of work shift scheduling to analyze the total workforce requirements and days-off schedule. For the primary analysis, assume that a. Operator requirements w
> River City National Bank has been in business for 10 years and is a fast-growing community bank. Its president, Gary Miller, took over his position 5 years ago in an effort to get the bank on its feet. He is one of the youngest bank presidents in the sou
> Securing a mortgage often is a time-consuming and frustrating experience for a homebuyer. The process involves multi- ple stages with many handoffs to independent organizations providing specialized services (e.g., property survey and title search). The
> 1. What features of the 7-Eleven Japan distribution system illustrate the concept of the bidirectional service supply relationship? 2. Does the 7-Eleven Japan distribution system exhibit scalability economies? 3. How does the 7-Eleven example of B2C e-co
> 1. How does the Boomer Technology Circle illustrate the concept of the bidirectional service supply relationship? 2. How has Boomer Consulting, Inc., made the client a coproduce in the service delivery process? 3. How is the concept of “
> 1. Utilizing a spreadsheet version of the Huff location model (with λ = 1.0), recommend a store size and location for AFI. Assuming that AFI does not wish to consider a store that is smaller than 10,000 square feet, assess the store sizes (b
> Joan Taylor, the administrator of Life-Time Insurance Company, which is based in Buffalo, New York, was charged with establishing a health maintenance organization (HMO) satellite clinic in Austin, Texas. The HMO concept would offer Austin residents an a
> 1. Briefly summarize the complaints and compliments in Dr. Loflin’s letter. 2. Critique the letter of Gail Pearson in reply to Dr. Loflin. What are the strengths and weaknesses of the letter? 3. Prepare an “improved” response letter from Gail Pearson. 4.
> 1. Prepare an -chart and R-chart for complaints, and plot the average complaints for each crew during the nine-month period. Do the same for the performance ratings. What does this analysis reveal about the service quality of CSI’s
> 1. Describe Village Volvo’s service package. 2. How are the distinctive characteristics of a service firm illustrated by Village Volvo? 3. How could Village Volvo manage its back office (i.e., repair operations) like a factory? 4. How can Village Volvo d
> 1. How do the environmental dimensions of the services cape explain the success of Central Market? 2. Comment on how the services cape shapes the behaviors of both customers and employees. Central Market5 The original Central Market grocery store, locat
> 1. Use CRAFT logic to develop a layout that will maximize customer time in the store. 2. What percentage increase in customer time spent in the store is achieved by the proposed layout? 3. What other consumer behavior concepts should be considered in the
> 1. Identify the bottleneck activity, and show how capacity can be increased by using only two pharmacists and two technicians. 2. In addition to savings on personnel costs, what benefits does this arrangement have? Health Maintenance Organization (B) Th
> 1. Beginning with a good initial layout, use operations sequence analysis to determine a better layout that would minimize the walking distance between different areas in the clinic. 2. Defend your final layout based on features other than minimizing wal
> 1. How has Enterprise Rent-A-Car (ERAC) defined its service differently than that of the typical national car rental company? 2. What features of its business concept allow ERAC to compete effectively with the existing national rental car companies? 3. U
> 1. Describe the service organization culture at Amy’s Ice Cream. 2. What are the personality attributes of the employees who are sought by Amy’s Ice Cream? 3. Design a personnel selection procedure for Amy’s Ice Cream using abstract questioning, a situat
> 1.How does Amazon.com illustrate the sources of service sector growth? Comment on information technology, the Internet as an enabler, innovation, and changing demographics. 2.What generic approach(s) to service design does Amazon.com illustrate, and what
> 1. Prepare a service blueprint for Commuter Cleaning. 2. What generic approach to service system design is illustrated by Commuter Cleaning, and what competitive advantages does this design offer? 3. Using the data in Table 3.5, calculate a break-eve
> 1. Describe the growth strategy of Federal Express. How did this strategy differ from those of its competitors? 2. What risks were involved in the acquisition of Tiger International? 3. In addition to the question of merging FedEx and Flying Tigers pilot
> 1. Prepare a service blueprint for the 100 Yen Sushi House operation. 2. What features of the 100 Yen Sushi House service delivery system differentiate it from the competition, and what competitive advantages do they offer? 3. How has the 100 Yen Sushi
> 1. Prepare a run chart on each of the incident categories. Does she have reason to be concerned about burglaries? What variable might you plot against burglaries to create a scatter diagram to determine a possible explanation? 2. What is unusual about th
> Conduct a Google search on “project finance” and find employment opportunities in project finance. What is the role of finance in projects?
> Could firms in the “world-class service delivery” stage of competitiveness be described as “learning organizations’?
> Discuss the difference between time variance, cost variance, and schedule variance.
> Explain why the PERT estimate of expected project duration always is optimistic. Can we get any feel for the magnitude of this bias?
> Are Gantt charts still viable project management tools? Explain.
> Illustrate the four stages of team building from your own experience.
> Give an example that demonstrates the trade-off inherent in projects among cost, time, and performance.
> Identify dependent and independent demand for an airline and a hospital.
> Service capacity (i.e., seats on an aircraft) has characteristics similar to inventories. What inventory model would apply?
> How is a service level determined for most inventory items?
> How valid are the assumptions for the simple EOQ model?
> Discuss how information technology can help to create a competitive advantage through inventory management?
> Determine if the U.S. service sector currently is expanding or contracting based upon the Non-Manufacturing Index (NMI) found at ISM Report on Business on the Institute of Supply Management website: http://www.ism.ws/pubs/ismmag/.
> Compare and contrast a continuous review inventory system with a periodic review inventory system?
> How would one find values for inventory management costs?
> Discuss the functions of inventory for different organizations in the supply chain (i.e., manufacturing, suppliers, distributors, and retailers).
> What changes in (, (, and ( would you recommend to improve the performance of the trendline seasonal adjustment forecast shown in Figure 11.4? Figure 11.4: Profile of Operator Requirements and Tour Assignments Number of operators 25 20 15 10 5 0 12
> Why is the N-period moving-average model still in common use if the simple exponential smoothing model has superior qualities?
> Suggest a number of independent variables for a regression model to predict the potential sales volume of a given location for a retail store (e.g., a video rental store).
> The number of customers at a bank likely will vary by the hour of the day and by the day of the month. What are the implications of this for choosing a forecasting model?
> For each of the three forecasting methods (i.e., time series, causal, and subjective), what costs are associated with the development and use of the forecast model? What costs are associated with forecast error?
> What characteristics of service organizations make forecast accuracy important?
> Discuss how the M/G/( model could be used to determine the number of emergency medical vehicles that are required to serve a community.
> Give an example of a firm that began as world-class and has remained in that category.
> What are some disadvantages associated with the concept of pooling service resources?
> For a queuing system with a finite queue, the arrival rate can exceed the capacity to serve. Use an example to explain how this is feasible.
> Example 13.1 presents a naïve capacity planning exercise and was criticized for using averages. Recall the concept of a "bottleneck" from Chapter 5, "Supporting Facility and Process Flows," and suggest other reservations about this planning exercise.
> Discuss how one could determine the economic cost of keeping customers waiting.
> When the line becomes long at some fast-food restaurants, an employee will walk along the line taking orders. What are the benefits of this policy?
